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Jim Grant on Fed Errors

Ritholtz - Sun, 04/01/2012 - 15:55

James Grant, Grant’s Interest Rate Observer, says U.S. policymakers are prolonging symptoms of the recession, adding that the Fed should
from the 1920-21 Depression.

What’s on Jim Grant’s Mind?

Thu 29 Mar 12 | 04:10 PM ET

April Fool's: Connecticut Representative Is Not in the Hospital [Oops]

Gawker - Sun, 04/01/2012 - 15:21
Connecticut state government official Mike Lawlor broke the news at 5:30 a.m.: "Rep. Dargan in hospital following accident." Who could h
known that such a sparse and harrowing tweet was actually a hilarious April Fool's Day prank? More »

India and the Euro Zone – a complete mess

Ritholtz - Sun, 04/01/2012 - 14:30

What’s India and the Euro Zone got in common – well they are both a complete mess.
India


The political and economic situation in India is deteriorating. Continued corruption scandals (and we are talking serious money in respect
corruption – allegedly US$211bn in respect of just the coal sector), accompanied by worsening economic data, suggests that India will fac
increasing economic, political and financial pressures in due course. I am in the process of preparing a report on India, which I will send ou
course – late April. However, just one data point. India’s 4th Q 2011 current account deficit nearly doubled to US$19.6bn, from US$10.1bn
year. India needs a significant amount of capital inflows to address the current account deficit – however, if the markets become cautious
emerging markets (“EM’S”) and India in particular, as I believe they will, the current account deficit looks like a real problem.


The RBI’s policy of keeping interest rates high to address inflation (which has certainly not been brought under control and, unfortunately
worsen as oil prices increase), is clearly impacting the economy. India’s inflation basket is heavily weighted towards food and energy – we
50%. However, with the government, for political reasons, keeping fiscal policy far too lose (in an attempt to shore up support for itself), i
will rise further, which will limit the ability of the RBI to reduce interest rates, even though they realise that the high interest rates, prevail
present, are hurting the economy. The Prime Minister seems incapable of dealing with the issue and is generally considered weak. In addi
there is a serious risk of political fragmentation, as Congress continues to lose support, with regional parties attracting support. In additio
coalition politics involves a number of murky deals, concocted in smoke filled rooms, at the dead of night.

The consequences are a worsening economic position – the Governments budget deficit (forecast at 5.1% for 2012/13, as compared with
the year to 31st March 2012) is not under control and the recent budget is widely acknowledged as being both inadequate and unrealistic
elections are scheduled for 2014, and this years budget was effectively the last opportunity (clearly totally missed) to address the rising
imbalances.

The Government intends to borrow a significant sum (estimated at US$72 bn or 65% of its 2012/13 requirements, as compared with 49%
in the 1st half of the fiscal year starting 1st April – however, the Indian Government it borrowed US$17.6bn in January. The Indian Govern
forecast that it needs to borrow Rupee 5.69tr for the coming fiscal year.


The consequence of all of this will be a weakening Rupee (though high interest rates are helping for the moment – YTD, the Rupee has bee
amongst Asia’s best performer with a rise of 3.8% against the US$, though is declining recently) and continued weakness of the Indian equ
markets, especially on a Rupee basis. With Indian equity markets (quite/largely?) dependent on foreign buying, (which is tailing off – India
investors have been sellers rather than buyers), I really cant see any upside there either. Foreign bond investors have been selling Indian d
Bloomberg reports that they sold around US$902mn more Rupee denominated debt this month than they bought, the first net selling sin
September and the largest amount of selling in 2 years. The 10 year bond is yielding around 8.50% and analysts expect a rise to possibly 8


The market has focused (quite rightly) on the serious problems in China, which I have been banging on for nearly 3 years and less so on In
Chinese markets have corrected materially (though I still would not be a buyer), though India, less so. Indeed, India looks particularly expe

As you know, I’m short India and see no reason to close my position.

Euro Zone
The EU is pushing out its begging bowl yet again – this time, it’s seeking money from the IMF, to help bolster the Euro Zone’s (“EZ’s”) bail
funds. The EZ increased the bail out fund by E200bn – not the E300bn, as some EZ politicians claim. In addition, EZ politicians keep stating
they “have done their homework”. I’m really getting fed up of this German expression – as far as I’m concerned they should remain in det
hopefully for ever. Nevertheless, with the former French Finance Minister (Mrs Lagarde) in charge of the IMF and with the IMF’s Spring m
due mid April – I continue to believe that the IMF will cough up. I’ve seen reports of the IMF contributing US$500bn, which seem absurdly
me – yes Mrs Lagarde is seeking to raise US500mn, but only a percentage of these funds will be allocated to the EZ.

The US will not contribute, though it’s support is critical, as it’s the IMF’s largest shareholder. I don’t believe they will block any lending to
the US is desperate for Europe to recover, as otherwise its own fledgling recovery will be strangled at birth, particularly given a slowing Ch
EM’s generally. Japan is recovering – reconstruction spending post tsunami – but every time I look at the country, I just wonder how they
made it to date. An US Treasury spokesman stated that ” (the) announcement by the Eurogroup reinforces a trajectory of positive efforts
strengthen confidence in the euro area”. Ms Natalie Wyeth added, “Over the last several months, European leaders have made significan
in addressing the crisis”. Oh yeah !!!, certainly could have fooled me. The ECB, well yes it certainly has acted positively, following the retire
the lunatic Trichet, but the EZ – come now.


The German finance minister Mr Schaeuble and the French PM, Mr Baroin are leading the charge to grab as much IMF money as possible,
likely provided by the EM’s (China, Brazil, Middle East countries, the EZ, maybe even the UK, etc), with support from the Eurocrats, Mr Oll
et all. The EZ has committed to providing the IMF with E150bn. The EM’s, especially the BRICS, will have to provide financing as they don’
bankrupt Europe, as it sinks their economies, but are holding out for more voting power at the IMF at present. They certainly should be gi
greater voting rights, but not a hope in hell this time around. In any event, I continue to believe they will cough up.


OK great, so the IMF provides some financing – will not be enough to sort out Spain though. However, I continue to believe that Portugal
Ireland will be rescued – they are small enough and have tried to live up to their commitments. Just look at the deal done in respect of Ire
promissory note which I referred to in yesterdays note. Italy remains a problem, but is far more resilient than the market thinks, if they ca
up their structural, including their labour, reforms. Reports suggest that Mario Monti is coming under increasing pressure – need to watch
carefully. I continue to fear that Spain remains a serious problem and one that does not have a solution at present. The recent budget wa
austere, but, unfortunately, I just don’t believe the numbers and cant see Spain meeting its forecast budget deficit of 5.3%.

The EZ desperately needs growth measures and not just hair shirt austerity policies, which will just make the situation more and more of a
– essentially creating a debt spiral, leading to total bankruptcy. In addition, the EZ needs to sort out their insolvent banks – and boy a larg
of European banks are insolvent.


The recent 3 year LTRO’s by the ECB has sorted out liquidity problems for the next few years (just one question – how are the banks going
the money borrowed at the end of the 3 years – remember it’s over E1tr. However, a number of banks need huge amount of new equity c
addition to coming clean and both writing off their bad loans and marking to market their “assets”. The European Banking Authority’s “str
tests” remain a complete joke and even on that basis, banks will struggle to raise the capital they need. It is clear that the market will not
the equity necessary to refinance the banks (just look what happened to UniCredit) and, as a result, the EZ/ECB will have to intervene. Un
happens, banks will continue to deleverage and reduce lending, further depressing the EZ economy, ie doing exactly what you don’t want
That is precisely why I was particularly interested in the FT’s reference to two allegedly secret reports – come now secret, within the EU/E
impossible – the EU/EZ is as leaky as a sieve. Of particular interest is a 3 page “Assessment of key risks and policy matters” prepared by th
economic and policy committee. To summarise, the report warns of dangers within European banks – even with the LTRO – as they may s
cash to operate on a day to day basis. The report suggests that these banks are resorting to unstable (and presumably expensive) sources
finance to fill the gaps. In addition, the collateral they used to pledge to the ECB in exchange for the 3 year LTRO loans, means that they d
have any more high quality collateral to pledge to get low interest loans from the market. Whoops. In addition, with Banks moving to the
bond market for financing, unsecured financing is getting scarcer and scarcer. Finally, the report adds that even the EBA’s (pathetic in my
view) requirement that some banks raise more capital, is forcing banks to deleverage and further tighten lending standards. Whoops, who
whoops again.

A second EU analysis reported on by the FT and titled “Economic Outlook, Financial Stability in the EU: Policy Challenges and Way Forward
the issue as to whether European banks are pressing ahead with cleaning up their balance sheets. It raises the question as to whether the
have fully written off bad mortgages and other loans. The report suggests that banks are increasingly delaying “risk recognition” and purs
“forbearance schemes”, which will limit lending to credit worthy customers.


Look this is not rocket science – the above was totally predictable. The “extend and pretend policy” re EZ banks has a sell by date, particu
EZ is pursuing “hair shirt” type austerity measures exclusively and without any pro growth policies – basically, the situation will just get wo
worse. Someone, please tell the Germans. At the end of the day, they will end up paying even more. The LTRO’s were important but, esse
they principally buy time – but that time has to be used to sort out the banks – something which is just not happening

The Germans, at present, believe they are immune – I’m increasingly coming to the view that their confidence is misplaced, to say the leas
Without a reasonable EU economy (Germany’s largest trading partner), their export machine runs out of oil. Yes, they keep banging on ab
and China, but I suspect we all have significant reservations on that front – I certainly do. The US is picking up, but cannot remain immune
I’ve never believed the claptrap about decoupling, as it related to EM’s, but I also believe that DM’s are also impacted. This is a global eco
after all.

Without referring to the “secret reports”, Mr Asmussen, the German member on the ECB executive board talked about a bank resolution
Friday. I have heard Mr Asmussen speak on a number of occasions and I rate him. It is clear that European banks will have to be cleaned u
subsequently refinanced and that a bank resolution fund is exactly what is needed. In addition, I continue to believe that at the end of the
Germans will both lean and, indeed, do the right thing – after all, they remain the most important paymasters in the EZ. The EU has been
address this matter for over a year, headed up by an incompetent Frenchman – can’t even remember his name. If the EZ either waits for h
and/or his ideas, God help them.

Not a particularly cheerful report, I’m sorry to say.

The good news, is that as every day goes by, the nearer we get to that critical point where Governments will have to act, forced by the ma
am a firm believer in the view that when it comes to a difference between financial markets and politicians, financial markets will win, tho
accept, it will take time and cost.

In the EU, the appointment of Mario Draghi at the ECB has really changed the game – he has acted decisively and presumably in the face o
opposition. It’s a pity that the EZ has to go through additional pain (and indeed cost) before the Eurocrats are forced to do the right thing.
However, you now understand why I have been and remain totally opposed to the EU – how could you be otherwise.

Just one final thought – I’m beginning to get the feeling that the ECB will have to cut interest rates further – quite possibly (likely?) in the 1
this year.

I’m itching to short the Euro against the US$, but will wait for the IMF’s spring meeting and the (likely) contribution by the IMF of funds to
the EZ bail out fund.
Have a great weekend.

Kiron

Jumaane Williams Jokingly Joins The New York Knicks

NYObserver - Sun, 04/01/2012 - 14:23

Jumaane Williams (Photo: Facebook)


Jumaane Williams made the best April Fool's day prank we've seen so far this year from any New York politician . The Brooklyn Council me
who has emerged as a sharp critic of the Bloomberg administration since being elected in 2009, issued a prank statement today announci
"signed by the New York Knicks to a ten day contract." Mr. William's press release claimed he was asked to join the team "shortly followin
announcement that starting point guard Jeremy Lin would be out for the remainder of the regular season."


"It will be far easier to win an NBA championship than to convince Mayor Bloomberg to restore budget cuts to our youth and seniors," Mr
Williams said. "The Garden may be missing 'Linsanity' over the next several weeks, but I hope to bring some 'Jumaanity' of my own."

In his statement Mr. Williams noted the fact he has been "a Knicks fan my entire life."

"Any way that I can help our push to the playoffs will be extra special," Ms. Williams said.

Mr. Williams concluded his statement by admitting it was an April Fool's day joke.

"Happy April Fool's Day, New York City!" he said.

Billion Price Update

Krugman - Sun, 04/01/2012 - 14:20
Still no runaway inflation.

Tobin-Brainard 1963

Krugman - Sun, 04/01/2012 - 14:11
All settled, 49 years ago.

John Liu’s Suggested Reading List

NYObserver - Sun, 04/01/2012 - 14:06

John Liu in 2010. (Photo: Getty)
New York City Comptroller John Liu would like you to know that, in spite of his fundraising scandal, he has a large amount of support in Qu
Asian community, he stands by his management of his campaign finances and he is still "talking like a candidate" for the 2013 mayoral ele
new email evidence has led his antagonists on the New York Post editorial page to suggest Mr. Liu or his top aide may be the next ones ar
the ongoing imbgroglio that has already claimed one of his top donors and his campaign treasurer, Jenny Hou, Mr. Liu's campaign sent an
supporters with some reading material about the case.



Mr. Liu's email showcased an excerpt from a lengthy New York magazine feature about the investigation that featured an int
with the comptroller and focused on his strong support among Asians in his home base of Flushing. The article also addresse
theories among his supporters that Mr. Liu is being targeted due to his race or his vigorous opposition of Mayor Michael Blo
Mr. Liu's email described the feature as "an interesting article ... about Comptroller John Liu and the current investigation int
campaign fundraising" and said the writer, Mark Jacobson, "invested a great deal of time with John and in the community."


The email also included two different interviews Mr. Liu did with the Associated Press--one in which he outlined his defense against the fu
allegations and another highlighting the fact he's still carrying himself like he's preparing to run for mayor. Mr. Liu's email borrowed its tit
the New York article: "Unlucky 800," a reference to the importance of the number eight in Chinese culture and Mr. Liu's $800 cap on dona

Criterion Finally Releases Beloved Schwarzenegger Classic [Video]

Gawker - Sun, 04/01/2012 - 14:03
More »

Guide to Social Media, Wall Street Edition

Ritholtz - Sun, 04/01/2012 - 14:00

Yesterday when we left off, I was interviewed for an article in the NY Times where Fay DeBellis of Morgan Stanley was being
highlighted as a pioneer among Morgan Stanley’s effort to be more “social”. I said picking from a select library of compliance
approved tweets was soulless & socially retarded. I’m not sure if LOL or ROTFLMAO are in their library. Women fainted, child
cried.

So, here it is: Part 2:

~~~

Wall Street’s Guide to Social Media In Six Simple Steps

1. Social media is about sharing real things with real people. I’m not claiming to have mastered social media, frankly I’m pretty retarded,
other reason than I’m the type of person who uses the word retarded — but I am real — and that’s why people follow me. But if you wan
the difference between someone who is a master of social media (and real) vs. this Bulge Bracket BS that is Wall Street’s attempt at being
let me show you exhibit A:

Who would you rather follow?
2. Social Media is about Trust. When I see an interesting tweet from someone I trust (or looks trustworthy to me somehow from their sna
headshot), I click on it — trusting it’s not spam, trusting it’s going to challenge my perception, or make me laugh, or inform me about som
I’m interested in & didn’t know. Basically, I trust that this person is not going to waste my time.


As it is, trust is always initially based on faith, reinforced by actions, and eventually solidified by learning about our shared values. That las
the single most important. And here’s what I want you to do… go up to your Wall Street broker & ask them this simple question… What a
firm’s values? Then ask the person in the mailroom. Then the branch manager. None of them will be able to answer you. And if they can,
be with a straight face because let’s face it, for most of the suits working on the street, the shared value inside of these companies is one

“People come and work at this firm for one reason: to become filthy rich. That’s it. We’re not here to make friends. We’re not savin’ the fu
manatees here, guys…”

And when a company gets as big as Morgan or Merrill or Goldman and that ‘one reason’ is really the only reason everyone is there– whe
is the object of desire — no one can really can trust anyone, not even on the inside… Because there a 1,000 Greg Smiths ready to spill the
a book deal, if that’s the best play for more money (and if they can pull it off).



Trust me… almost everyone in that neighborhood brokerage office of yours would cut their best “work friend’s” throat in a N
York minute if it meant more for them. It’s the culture of money. If you’ve ever been in a brokerage firm office on a Friday, y
what I’m talking about. So, until that cultural value-less disconnect is reconciled & the ‘trust’ account is somehow replenishe
can count on more bland, soulless tweets from any of these big firms who don’t really deserve anyone’s trust anymore.


3. Small is better. I’m small. I’m like 5’8″ on a good day. Therefore, I eat less, my clothes use less fabric, I breath less air — generally I take
space on our crowded planet; you’re welcome. Smalls also live longer, actuarially speaking. So — I’m biased, but I think small is better.

I also think small in social media is better. Why? Because small companies have a handful of decision makers that create the
company & convey that soul to its people & audience consistently. And if their little loft of an office is listening to this song a
and wants to share it with the world, they can. Corny? Maybe — but real. Certainly there’s a sense of identity. And small
companies can still listen & watch everything leaving their office without miles of bureaucracy. At the end of the day, that’s a
advantage of being small when it comes to social media.

Meanwhile companies the size of Morgan Stanley print up notepads with aspirational messages for it’s 15,000+ advisors and encourages t
watch a 20 minute video on what it means to be a part of Morgan Stanley.


Small companies have culture because they are living together & growing together. All for one & one for all. I know in my office we discus
cases as a group to come up with the best solution “as a firm”. Do you think that’s what those morning meetings in your local broker’s off
for? I can assure you, they are not. The brokers in that office are shuffling into the conference room for the free donuts tied to an obligato
meeting about the next mutual fund or new franken-product being launched. But why change? They’re the kings of the money mountain.

Ultimately that’s one of the biggest problems with success though, when you have too much. And that’s the reason any money manager w
heart & brain will stop taking new money at some point — because they can no longer provide the attention & performance their once sm
allowed for. They self-limit, they know when to quit. But not Wall Street — bigger is better. They want more. Much more. Much, much, m
more. And now, they’re Too Big To….
4. Personally, I think it’s about Personality. The way I see it, big companies in the future are going to need big personalities. Personalities
embody the soul of the brand. But that’s no small feat. Steve Jobs & his legend are now the DNA of Apple.

Or how about Richard Branson? He’s pulling it off — a billionaire CEO with almost 2 million twitter followers — He’s rich enough to own a
& still somehow actually be adored. But it takes real zen-like work & focus. It takes personality, purpose, and soul. It takes the understand
Twitter isn’t some time suck or hobby… it’s a revolutionary new way to absorb information & communicate your values, message, and per
And your brand’s.

But it means making mistakes & paying the consequences (instead of getting bailed out over and over again). It’s not easy. Ju
Google CEO Larry Page …Google owns a social network and in the last 3 months he’s updated his profile like 11 times. How
committed is that to being social & transparent? Are we really sure we want them to have all of our information? Where’s th
fiduciary standard? But I digress…

5. Team of Ears, One Mouth. Even when big companies can leverage social media with big personalities — it still takes a village to run a vi
And on both fronts Wall Street is mostly missing in action. Being social is about openness & connectivity, using social media as a tool to an
questions, fix problems quickly & openly, and listen to what people are saying about you.

And just imagine what the 99% of twitter users would be saying, if Wall Street even cared enough to listen.



It’s not impossible though. Virgin America does it very well with their social media team. And, believe it or not… Bank of Ame
Wells Fargo have twitter feeds dedicated to such a thing. Of course, Wells Fargo reversing that overdraft fee because of your
is a bit of a different conversation than why your broker sold you that fee-laden piece of dung called an investment.

And so, the adoption of social media by the traditional Wall Street firms has been… well, I’ll let the pictures do the talking. Go ahead, click
— I’ll wait.

I know. Morgan Stanley’s profile still had the egg. On their face.

6. Be Fast. Social media is fast. Type, Click submit. Hello World.


Mistakes are bound to happen, it’s ok. Some days you’re going to have a bad hair day — that’s okay too, you’re only a corporation filled w
humans. But when you do something dumb or make a mistake, fix it -always as fast as you can – and even faster now that there’s social m

And here’s an example, probably the ultimate example, of Wall Street’s #fail when it comes to social media…

That article I mentioned yesterday in the NY Times. What AMAZING coverage for Fay, right? She is so lucky. I wish one of my
quotables had made it — It’s the NEW YORK freaking TIMES.

In all honesty, I was a bit jealous of Fay. I even went to see what was so great about her tweets. And then, I clicked on her ho
link on her twitter profile. I wanted to learn more about her. And my jaw dropped to the floor. Get this…this is what you’ll se
you click to learn more, Nothing.

The link doesn’t even work. (click away, I’ll wait) Now how insanely inanely mind-blowing is that?
…All that free publicity absolutely wasted. Probably hundreds of thousands of dollars in eyes & hours of due diligence by teams of attorne
negotiating contracts to watch that account. Heavy monitoring. How many people?? And her homepage link doesn’t even work.

And unless this post somehow goes viral & embarrasses the crap out of Morgan Stanley like the $5 Bank of America fee fiasco, I can almos
guarantee you it won’t be fixed, probably ever. Because Wall Street loves to make a quick buck, but they are slow to change, especially wh
comes to technology.


This is a new era people: a more social, interconnected era. The old guard of information & usual gatekeepers aren’t going to be the same
you want to be relevant: real is better, smaller is better, faster is better, personal is better, accountability is better… soul is better.

Maybe Fay will get to tweet that someday…

VIDEO after the Jump

~~~

Scott Bell is a 30-something married guy with two boys, two dogs, and a mortgage. He’s the CEO of Gross Domestic Product.
writes his personal opinions & insights about his industry at I heart Wall Street.

This was originally published there.

Hip Swedish People Spend Their Lunch Breaks Clubbing [Sweden]

Gawker - Sun, 04/01/2012 - 13:23
File under: Swedish people are culturally superior. The hot new trend in Stockholm is spending your lunch break "dripping with sweat and a
disco lights." It's called "Lunch Beat" and it's way better than grabbing a salad. More »

A Grand Unified Theory of Romney

American Prospect - Sun, 04/01/2012 - 13:20


In advance of Tuesday's primary in Wisconsin, the Milwaukee Journal-Sentinel gave a tepid endorsement to Mitt Romney, w
that "Romney's finger-to-the-wind tacking across the political sea leaves us to wonder if he is anchored anywhere," but also
"moderate inclinations" and saying, "it's those moderate impulses that make Romney the best candidate. His challengers do
the same sense of pragmatism or were woefully shortchanged on the temperament gene." But here's the question: What, e
the evidence that Mitt Romney has moderate inclinations?


Here's what we actually know. When Romney ran for Senate and then governor, he was a fairly liberal, pro-choice, pro-gay Republican—in
words, the only kind of Republican who would have had a chance to win in Massachusetts. Then when he ran for president, he became a f
breathing conservative—the only kind of Republican with a chance to win his party's nomination. The only way you can conclude that he's
moderate in his heart is if you believe his "true" ideology can be ascertained just by averaging the candidate he was in Massachusetts and
candidate he has been in Republican presidential primaries, and then presto, that average gives you the candidate he'll be in the general e
But there's no reason to think that's true, or to think he actually has "moderate impulses," or any particular ideological impulses at all. The
difference between a moderate ideology and a lack of ideology, and it seems pretty clear by now that Romney has the latter, not the form
Which isn't necessarily such a terrible thing.

Some of this is covered in a satirical piece in the New York Times by David Javerbaum, in which he offers a quantum theory o
Romney:


Complementarity. In much the same way that light is both a particle and a wave, Mitt Romney is both a moderate and a conservative, dep
on the situation (Fig. 1). It is not that he is one or the other; it is not that he is one and then the other. He is both at the same time.

Probability. Mitt Romney’s political viewpoints can be expressed only in terms of likelihood, not certainty. While some views are obviously
likely than others, no view can be thought of as absolutely impossible. Thus, for instance, there is at any given moment a nonzero chance t
Romney supports child slavery.


Uncertainty. Frustrating as it may be, the rules of quantum campaigning dictate that no human being can ever simultaneously know both
Mitt Romney's current position is and where that position will be at some future date. This is known as the "principle uncertainty principle.

Entanglement. It doesn't matter whether it's a proton, neutron or Mormon: the act of observing cannot be separated from the outcome of
observation. By asking Mitt Romney how he feels about an issue, you unavoidably affect how he feels about it. More precisely, Mitt Romn
feel every possible way about an issue until the moment he is asked about it, at which point the many feelings decohere into the single ans
most likely to please the asker.

Javerbaum is just kidding around here, but while I am on board with the entanglement part—Romney's opinion is like Schrodinger's cat, bo
and dead until it is observed—overall I think that Romney's ideology is better explained by ordinary Newtonian mechanics. The positions h
take are, in fact, predictable. There are a finite number of places Romney could end up on a particular issue, and if you can add up all the
influences on him, you could come up with an equation that would give you the answer.

Remember that Romney's positions aren't subject to a different set of independent variables than the positions of any other politician. It's
one big variable—conviction—is absent. There's a chance that Rick Santorum or any other true-believing politician would reverse his posit
any issue. In most cases, that chance is much, much, smaller than the chance Romney will, but it's still greater than zero.


Let's take the individual mandate as an example. Almost every Republican who ever expressed an opinion about it before 2009 has since r
themselves on it, and that includes many true-believing conservatives. When it comes to the mandate, they're all Romneys. Why? Because
never had much in the way of real convictions about it in the first place. Between 1993 (when Bill Clinton's reform effort failed) and 2009, t
didn't care about the issue of health care. So when the tiny number of conservatives who did bother thinking about it said, "Here's a conse
approach, the individual mandate," they said, "Sure, I'm in favor of that." But then when the political situation changed, they changed the
position, like Romney has done so many times on so many issues. Absent conviction, the political influences of the moment were all that m

Because we have no real examples of Mitt Romney standing his ground on an issue in the face of real political danger, we have no reason
believe he has any particular convictions that are likely to influence him in the future. So the best way to figure out what he'll do is to dete
which political forces are going to be acting on him. That includes the broader electorate, which will pull him toward the center, and a very
Republican base, which will pull him to the right as it always threatens to desert him. While the calculation will be different on each issue,
is that in broad terms what we'll see is a slightly more moderate Mitt, as he tries to move just enough to reassure independents without al
conservatives. And you don't need to know anything about his "impulses" to figure that out.

The Odds Are Still in The Hunger Games' Favor [Box Office]
Gawker - Sun, 04/01/2012 - 12:13
While tremendous box office success from Mirror Mirror would make a hilarious April Fool's joke, that's just not the case. For the second w
in a row, The Hunger Games trounced the competition, earning $61.1 million. The film has now grossed more than $250 million with recor
breaking speed. More »

Weekend Roundup: Budgeting Cuomo’s Way; Mayor of Mooseport; Looking to Wisconsin

NYObserver - Sun, 04/01/2012 - 11:50

Greg Ball celebrates "MTA Payroll Tax Freedom Day." (Photo: Facebook)

Governor Cuomo budgets his way, and The New York Times says it's not ideal.

Queens D.A. Richard Brown is battling Parkinson's disease

The New York Post doesn't want the Legislature to have member items.

And suggested John Liu or his adviser Chung Seto could be arrested next.

Liu's not seeing as many invitations to speak as he used to.

Lew Fidler feels like he's running for Mayor of Mooseport.

Headline: "Towns vows to campaign—any month now"

Preet Bharara has done a good job of going after elected officials.

Clyde Williams discussed his campaign on The Perez Notes.

Matt Doheny's campaign is reportedly concerned about what else might be out there.

The Times thinks NYU should be allowed to expand.

The Times Union thinks clothing shouldn't be taxed.

Occupy protesters are trying to give people free subway rides.

They're expected to mark the 6-month anniversary of their Brooklyn Bridge march today.

The New York Daily News is seeking jury deliberation transcripts in the Pena rape trial.

What happens next if the Supreme Court overturns health care reform?

On the presidential race:
Mitt Romney is seeking to seal the deal in Wisconsin.

Rick Santorum is asking Wisconsinites to not do that.

Romney predicts he'll win the Badger State.

Legitimate News Source Ditches Credibility for April Fool's Fun [April Fool's]

Gawker - Sun, 04/01/2012 - 11:07
For a brief moment, Google News' top story was "Romney Drops Out of Race, Endorses Santorum." This is decidedly untrue — but hey, it w
published by Forbes, so it must be worth something, right? Nowhere did it say this was a prank: although it should be obvious to most, we
country where actual people believe Onion headlines. And it's not as though this is that much more ridiculous than the Republican primary
been thus far. More »

Forensic Experts Say Screams on 911 Call Are Not George Zimmerman's [Trayvon Martin]

Gawker - Sun, 04/01/2012 - 10:44

There has been much debate about the audio recordings of 911 calls on the night George Zimmerman shot Trayvon Martin — were the cri
help heard in the background from Martin or from Zimmerman? Those who believe Zimmerman's claim of self-defense said he was the on
for help — suggesting Martin had the upper hand in the fight — while others have insisted it was Martin begging for his life. More »

Your Best April Fool's Day Prank Stories [April Fool's]

Gawker - Sun, 04/01/2012 - 10:04
It's April Fool's Day, which means you've probably already been tricked into believing something amazing and then mocked for your gullibi
this fun? But for those who want to live vicariously through other people's pranking, here's a collection of reader submissions sent in follow
appeal on Friday. More »

1% to Wirehouses: BUH-Bye

Ritholtz - Sun, 04/01/2012 - 10:00

Last month, I posted a long discussion on the exodus of asset managers from Merrill. According to several dozen Merrill brok
emailed me, that post was promptly blocked by Bank of America.

Which is a shame.


Anytime you see a corporate management put its head in the sand, it is a bad sign for the future of that firm. The preference is for transpa
honest responses to criticisms, some degree of self-reflection — not Big Brother censorship. Of course, BofA long ago committed suicide w
Countrywide purchase and other mortgage follies, and exists today only due to the largesse of taxpayers who bailed them out. With that s
poor decision-making in the DNA of the company, I cannot say I am surprised by yet another example of bad executive judgment.
The investing wealthy have come to a similar conclusion. A new Reuters article this past week is titled Merrill, Morgan Stanle
losing grip on rich. (I wonder if BofA is going to block Reuters as well?). As it turns out, its much easier to browbeat Congress
into handing over billions than it is to get the top 1% to do the same.

Here are the key bullet points I picked out of the Reuters column:

• 2008 Financial Crisis : Have led big investors to lose faith with Morgan Stanley, Citigroup and UBS — all 3 were bailed out by taxpayers —
Merrill Lynch — which was rescued by a Bank of America takeover, which itself was eventually bailed out by taxpayers.• Technology : is le
the playing field between smaller,more nimble frims and the industry giants.

• RIA and family-offices : were the fastest growing firms, increasing assets under management by 18% to $356 billion in 2010 (vs 2% amo
four).


• Winners & Losers : There were some winners in the asset shift — Private client units of banks such as Credit Suisse, Deutsche Bank, Bank
York Mellon and Barclays. The Losers? Big 4 brokerages (Morgan Stanley Smith Barney, Merrill Lynch, Wells Fargo Advisors and UBS)

Here’s an excerpt from Reuters:

“The biggest U.S. brokerages have set their sights set on attracting the wealthiest Americans, but a new study concludes a growing numbe
multi-millionaire households are taking their money elsewhere.

The share of high net worth customers’ assets held by the top four brokers — Morgan Stanley Smith Barney, Merrill Lynch, Wells Fargo Ad
and UBS Wealth Management Americas — has fallen since the financial crisis and will continue to fall, research firm Cerulli Associates said
report on Wednesday.

That market share, which peaked at 56 percent in 2007, fell to 45 percent last year and is expected to drop to 42 percent by 2014. The com
together had $2.1 trillion in assets from clients with at least $5 million to invest . . .


Merrill, for example, is discouraging brokers from taking on new clients with less than $250,000 so that they have more time to find and w
million-dollar accounts.Consulting firm McKinsey & Co recently declared the $1 million to $10 million account as the “sweet spot” for priva
because these clients generate higher margins — two to three times more than investors with tens or hundreds of millions of dollars.

Waves of financial advisers, meanwhile, moved to smaller and more independent wealth managers in search of greater stability or fewer c
of interest.”

The rich are different than you and I. Its not just that they have more money — they are much more careful with whom they trust it to . . .

~~~

Hat tip Josh

>

Source:
Merrill, Morgan Stanley seen losing grip on rich
Joseph A. Giannone
Reuters, Mar 29, 2012
http://www.reuters.com/article/2012/03/29/us-brokerages-marketshare-idUSBRE82S0T320120329

Rick Santorum: And I Am Telling You, I'm Not Going [Election 2012]

Gawker - Sun, 04/01/2012 - 08:56
Is Mitt Romney the Republican presidential nominee yet? Well, not quite. Appearing on NBC's Meet the Press, Rick Santorum acknowledge
the Wisconsin primary will send a "strong signal" as to where the campaign is headed. Even so, a Santorum loss will not be enough for him
out — not when we're all having so much fun. More »

Schrödinger's Candidate

Krugman - Sun, 04/01/2012 - 08:01
The many worlds of Mitt Romney.

I Quit

Ritholtz - Sun, 04/01/2012 - 07:30

I guess it all started when Taylor Swift wrote that damn song about me. I mean I’m just a middle-aged blogger, why did the biggest star in
have to pick on ME? She’s beautiful, talented, rich and possesses one hell of a singing voice. Everybody has a bad day, just because hers w
Grammys doesn’t mean I have a right to excoriate her. Then again, I was stupid enough to admit I was the protagonist of the song, unlike
Mayer, but did she have to go on Jay Leno and out me? That hurts. And everybody knows I’m thin-skinned. My dad died, my wife left me, d
she know if I don’t see my psychiatrist I’m gonna commit suicide?

But what’s worse is my readers. It doesn’t matter what I say or do, they still believe I fly on the Spotify jet, that Irving Azoff writes me a che
month, that I wrote good words about Jimmy Iovine because he sent me a case of Beats to fence on the black market. In a country where
everybody’s on the take, where politicians are indicted on a regular basis, it doesn’t pay to be honest.

So I’m stopping. Giving up. Going over to the dark side.

No, I’m not going to work for Doug Morris, hell, I’m not even going to work for Live Nation, there’s just not enough money involved. Irving
chasing billionaires, but you just can’t make it in music, you’ve got to go where the money is, finance.

Oh, it’s been done before. Check the CVs of Bruce Wasserstein and Steve Rattner. They woke up, chucked aside their journalistic aspiration
went where the real power was, investment banking.


And why not. Everybody thinks I’m wealthy anyway. I make a facetious comment about being rich and my inbox blows up with people cast
me for being a one percenter. You’d have thought I was giving away Facebook stock. I’m sick of being poor, now I truly am going to be rich

No, I turned down Lloyd Blankfein. We may look similar, we may both be follically challenged, but do you think I still want to be in the pub
after what I’ve been through?

No, I’m going to work for a hedge fund in Greenwich. My mother’s getting older by the minute, I’ve rented a condo in Westport, Connectic
halfway between her and work, until I get my bearings, get some cash and buy a house.
No, I’m not going to tell you the name of the firm. You wouldn’t know it anyway.

They made me an offer I couldn’t refuse. I brought in my black book. I’m tapping every relationship I have for cash. Everybody from Paul
McGuinness to Don Henley. Even Donnie Ienner and Tommy Mottola. If you’re wealthy, expect to hear from me.

As for the rest of you…it’s payback time.

I’ve sold my list to so many marketers I can afford a year in the Maldives. You’re gonna be spammed to high heaven. You always think I’m
my list anyway, so why not do it?

I’m all about the cash now baby. I gave you all that information for free and all you did was bust my balls. I can’t even say something nega
about Groupon. The stock tanks after I write, but you’re so busy drinking at the trough of your insignificant income, proud to be poor, that
can’t see that you’ve been sold a bill of goods.

So I’m leaving you behind.

Music’s done anyway.


You ruined it. You stole those MP3s and now music executives are homeless and even Bruce Springsteen has to go to SXSW to shill his new
There’s no money left. Jay-Z and Dre make more money off of non-music ventures and all you’ve got left in music is wannabes. Blecch.

If you’re smart, you’ll follow me. Thinking you can make a living in music is like believing you can win the lottery. And you think it takes jus
much skill. Nada. I went to college, I went to law school, I’m done with you, I’m going behind the gate and throwing away the key, only fly
private from now on.


Look, I get it. You can’t have people like Lefsetz writing whatever he wants, pissing off teenagers like Taylor Swift. If you let him loose he’ll
radio, television, newspapers…who knows what’s next. He’s got way too much power. Otherwise why would you bother to read the words
idiot who never signed a hit act and never ran a major record label. That would be like saying Bob Costas is qualified to call baseball or hos
Olympics, even though he never even batted in the MLB, never mind hit 300, and he’s too wimpy to even throw the hammer.

People like Lefsetz need to be shut up. I mean who does he think he is? There’s nobody he hasn’t written negative stuff about. He’s just a c
loser who is desperate to be close to fame. He’s been doing it for twenty five years already. He’s put in 10,000 hours and he’s not as talent
never mind famous as, Paula Abdul.

Good riddance.

I hear you. I’m done.

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Baseline Scenario
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 JP Morgan Debacle Reveals Fatal Flaw In Federal Reserve Thinking
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 Who Pays for Facts?
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 Yes Lab Gives US Trade Negotiators “Corporate Power Tool” Award
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 Robert Shiller is Wrong

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Krugman
 The Cost of Pre-Fed Panics
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 Eating the Seed Corn
 What's Really Scary

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 Various matters
 Wall Street’s immunity
 Obama “evolves” on marriage
 US attack kills 5 Afghan kids
 A vital (and unlearned) lesson from Julius Caesar

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(c) 2010 By Angry Pedestrian. All rights reserved.
n, adding that the Fed should learn




owing accident." Who could have
 ing serious money in respect of
 a, suggests that India will face
  on India, which I will send out in due
 o US$19.6bn, from US$10.1bn, year on
 he markets become cautious about
  a real problem.


er control and, unfortunately will
owards food and energy – well above
 shore up support for itself), inflation
he high interest rates, prevailing at
 ally considered weak. In addition,
attracting support. In addition,


 r 2012/13, as compared with 5.9% for
 th inadequate and unrealistic. Federal
 issed) to address the rising


 ents, as compared with 49% last year),
 n January. The Indian Government has



ment – YTD, the Rupee has been
  d weakness of the Indian equity
ng, (which is tailing off – Indian
 ors have been selling Indian debt –
 ought, the first net selling since last
 sts expect a rise to possibly 8.70%.


early 3 years and less so on India.
 , India looks particularly expensive.
 the Euro Zone’s (“EZ’s”) bail out
on, EZ politicians keep stating that
 ed they should remain in detention,
 and with the IMF’s Spring meeting
$500bn, which seem absurdly high to
the EZ.

they will block any lending to the EZ –
 articularly given a slowing China and
 ntry, I just wonder how they have
 trajectory of positive efforts to
leaders have made significant progress
positively, following the retirement of



much IMF money as possible, most
ort from the Eurocrats, Mr Ollie Rehn
 rovide financing as they don’t want a
  t. They certainly should be given
 gh up.


 nue to believe that Portugal and
he deal done in respect of Ireland’s
n the market thinks, if they can keep
sing pressure – need to watch this
 esent. The recent budget was indeed
deficit of 5.3%.

 situation more and more of a problem
olvent banks – and boy a large number



on – how are the banks going to repay
huge amount of new equity capital, in
pean Banking Authority’s “stress
lear that the market will not provide
CB will have to intervene. Until that
 exactly what you don’t want.
e now secret, within the EU/EZ – that’s
olicy matters” prepared by the EU’s
with the LTRO – as they may still need
esumably expensive) sources of
TRO loans, means that they do not
on, with Banks moving to the covered
 en the EBA’s (pathetic in my humble
ding standards. Whoops, whoops and


 Challenges and Way Forward, raises
 e question as to whether the banks
 g “risk recognition” and pursuing




nks has a sell by date, particularly if the
 , the situation will just get worse and
O’s were important but, essentially,
 appening

 e is misplaced, to say the least.
 Yes, they keep banging on about EM’s
p, but cannot remain immune either.
 mpacted. This is a global economy


lked about a bank resolution fund on
anks will have to be cleaned up and
 believe that at the end of the day, the
 s in the EZ. The EU has been trying to
me. If the EZ either waits for him




 have to act, forced by the markets. I
 inancial markets will win, though I


 and presumably in the face of severe
e forced to do the right thing.
herwise.

quite possibly (likely?) in the 1st half of


bution by the IMF of funds to enhance
ian . The Brooklyn Council member,
nk statement today announcing he was
oin the team "shortly following the




to our youth and seniors," Mr.
 Jumaanity' of my own."
arge amount of support in Queens'
ate" for the 2013 mayoral election. As
 aide may be the next ones arrested in
u, Mr. Liu's campaign sent an email to




 gation that featured an interview
g. The article also addressed
 tion of Mayor Michael Bloomberg.
he current investigation into his
n and in the community."


ned his defense against the fundraising
 r. Liu's email borrowed its title from
nd Mr. Liu's $800 cap on donations.




Morgan Stanley was being
elect library of compliance-
rary. Women fainted, children




a, frankly I’m pretty retarded, if for no
ple follow me. But if you want to see
Wall Street’s attempt at being “social”
o me somehow from their snazzy
ugh, or inform me about something




ut our shared values. That last part is
 his simple question… What are your
 answer you. And if they can, it won’t
de of these companies is one thing:

riends. We’re not savin’ the fuckin’


ason everyone is there– when money
Greg Smiths ready to spill the beans for




work friend’s” throat in a New
ge firm office on a Friday, you know
unt is somehow replenished — you
yone’s trust anymore.


ath less air — generally I take up less
 but I think small is better.

 on makers that create the soul of a
 e is listening to this song all day,
e of identity. And small
 the end of the day, that’s a big


 0+ advisors and encourages them to




I know in my office we discuss client
ings in your local broker’s office are
ree donuts tied to an obligatory sales
 ings of the money mountain.

reason any money manager with a
 & performance their once smaller pile
 Much more. Much, much, muchly
ig personalities. Personalities that


 — He’s rich enough to own an island
 soul. It takes the understanding that
your values, message, and personality.



over again). It’s not easy. Just ask
profile like 11 times. How
ur information? Where’s their


 still takes a village to run a village.
ng social media as a tool to answer




eve it or not… Bank of America &
erdraft fee because of your tweet
ed an investment.

 o the talking. Go ahead, click through




 ’re only a corporation filled with
ster now that there’s social media.




 so lucky. I wish one of my


nd then, I clicked on her homepage
t this…this is what you’ll see when
diligence by teams of attorneys
doesn’t even work.

 merica fee fiasco, I can almost
 slow to change, especially when it




 s aren’t going to be the same, and if
better… soul is better.




 f Gross Domestic Product. Inc. and




ak "dripping with sweat and awash in




 ement to Mitt Romney, worrying
hored anywhere," but also citing his
ndidate. His challengers don't share
 re's the question: What, exactly, is



hoice, pro-gay Republican—in other
  for president, he became a fire-
ay you can conclude that he's a
he was in Massachusetts and the
 idate he'll be in the general election.
deological impulses at all. There's a
 y has the latter, not the former.



 offers a quantum theory of Mitt



erate and a conservative, depending
oth at the same time.

 ile some views are obviously far less
n moment a nonzero chance that Mitt




er simultaneously know both what
rinciple uncertainty principle."

parated from the outcome of the
t. More precisely, Mitt Romney will
s decohere into the single answer


 on is like Schrodinger's cat, both alive
an mechanics. The positions he will
and if you can add up all the


ns of any other politician. It's just that
tician would reverse his position on
r than zero.


out it before 2009 has since reversed
e all Romneys. Why? Because they
 orm effort failed) and 2009, they just
about it said, "Here's a conservative
n changed, they changed their
f the moment were all that mattered.

 l danger, we have no reason to
re out what he'll do is to determine
 toward the center, and a very restive
 ill be different on each issue, my guess
 sure independents without alienating
ot the case. For the second weekend
than $250 million with record-
cidedly untrue — but hey, it was
hould be obvious to most, we live in a
 than the Republican primary has




rayvon Martin — were the cries for
 f-defense said he was the one calling
ging for his life. More »




d then mocked for your gullibility. Isn't
 der submissions sent in following my




 several dozen Merrill brokers who




 The preference is for transparency,
ong ago committed suicide with their
 bailed them out. With that sort of
executive judgment.
tled Merrill, Morgan Stanley seen
sier to browbeat Congressmen




were bailed out by taxpayers — and
 axpayers.• Technology : is leveling


 56 billion in 2010 (vs 2% among big




 t Suisse, Deutsche Bank, Bank of New
 argo Advisors and UBS)




 y concludes a growing number of


 Merrill Lynch, Wells Fargo Advisors
 ch firm Cerulli Associates said in a


  42 percent by 2014. The companies




 have more time to find and work with
  as the “sweet spot” for private banks,
 ds of millions of dollars.

 of greater stability or fewer conflicts



with whom they trust it to . . .
, Rick Santorum acknowledged that
oss will not be enough for him to drop




er, why did the biggest star in America
 bad day, just because hers was on the
 otagonist of the song, unlike John
 y dad died, my wife left me, doesn’t


at Irving Azoff writes me a check every
k market. In a country where




nough money involved. Irving’s busy


de their journalistic aspirations and




box blows up with people castigating
 ow I truly am going to be rich.

nk I still want to be in the public eye


condo in Westport, Connecticut,
 cash. Everybody from Paul
me.




heaven. You always think I’m selling


an’t even say something negative
come, proud to be poor, that you




to go to SXSW to shill his new album.
 usic is wannabes. Blecch.

ery. And you think it takes just as
rowing away the key, only flying




 wift. If you let him loose he’ll ruin
you bother to read the words of this
 ualified to call baseball or host the
ow the hammer.

ative stuff about. He’s just a crybaby
0 hours and he’s not as talented as,
de Price Used In Europe

 Vote for Ron Paul If They Want
 System By Switching To a
n HIGHER U.S. Prices

								
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